Trade and Climate Policies: Do Emissions from International Transport Matter?

This paper provides orders of magnitude of the importance of CO2 emissions from international transport freight activities under a variety of scenarios regarding trade and climate policies. It is based on a stylized multi-region, multi-sector CGE model that includes the four modes of international transport (air, water, road and rail) and where choices regarding the energy mix and transport mode have been endogeneized. A separate decomposition of emission changes into the well known scale, composition and technique effects is provided. Scale effects turn out to be roughly double in international transport than in exports, while technique effects are weaker due to less substitutability between energy inputs. As a result, international transport represents half of the world increase in global emissions when trade liberalization is considered isolately. When trade liberalization is coupled with a carbon tax limited to rich countries, international transport represents roughly one eigth of the carbon leakage effect.